Loss-making China Eastern airlines could be sounding a warning most of the rest of the world does not want to hear.
It had operating losses of close to $US1 million ($1.15 million) a day in the first half of 2008.
In a statement, the Shanghai-based airline said it faced an ‘extremely complicated operating environment’ in the second half, with ‘increasing uncertainties in the global economy, while the Chinese economy will probably experience a slowdown under the macroeconomic adjustment policy’.
One could excuse China Eastern for being gloomy about the outlook. After all, it narrowly missed out on securing a white-knight investor in Singapore Airlines (SIA) earlier this year, only to be battered by snow storms, earthquakes and Olympics security clampdowns which, by July, had slashed its international passenger traffic by almost a third.
China Eastern concludes that air travel demand is ‘likely to experience a downturn, while pressure from ever-increasing costs is likely to pose a threat to the development of the air transport industry’.
This is the first official indication by a Chinese airline that the much-hoped-for post-Olympics recovery may not materialise. For China Eastern, the next steps could involve a government bailout, domestic consolidation or both. More on this HERE.
Source: The Australian